Hmm. Well, in my case the info I use for my Windows Live log in was only used on whatever sites required it. The only ones that I know of are the Xbox, Xbox.com and there is one that escapes me now. My password was different so I'm not sure how that's my fault?
And the guy in the Kotaku article, how was it his fault?
I can see if you use the same e-mail and password on myriad sites, then yes I think you're opening yourself for failure.
The crazy thing is why on Earth anyone would want these accounts in the first place, just for the prestige of having a respected account?!? I could undertsnad the whole FIFA debacle because of the money aspect with Ultimate Team. But people paying actual money just to have a gamertag?
I've never heard of this on STEAM (But I don't play on PC) or on PS3. Both have systems in place where you earn a reputation, collect virtual accolades, etc. But you only hear about this shit on Xbox.
I'm just pointing out what I've seen but the Kotaku guy really seems like he got "hacked" by some identity theft guys.
Your windows live ID being hacked it pretty much your own fault as most likely it was picked up from some keylogger you may have picked up browsing anywhere and not having up to date flash and java on your machine. This sorta thing even happends on macs so blaming microsoft isn't the problem. It happends way to often these days. I'm sure everyone has seen someones facebook profile sending out shit and I'm sure at this point everyones seen a gmail, yahoo, hotmail ect ect account sending out spam. It's all identity theft these days and there is little "hacking" going on. Microsoft isn't the only one being affected it by. You might only choose to think that but they are the only ones with problems.
The biggest problem out of all of this is there is a shit ton of this stuff going on and cops frankly don't have the man power to go after guys that are stealing small amounts of online things and then reselling it. It comes down to things like would you rather have your time being spent going after people who may be stealing a couple grand worth of online identities or go bust some crack house with 10s of thousands of dollars in it. Blaming Microsoft for something that they themselves have tried hard to stop is not right. Just remember though everytime you call some place and they ask you a billion questions like "what was your first pets name" and your getting pissed off because you want to get your problem sorted out, that they are doing it to curb identitiy theft and are trying everything can to make sure you are who you are.